EU mandates banks to hold euro equivalent of crypto investments

EU lawmakers passed a law on Jan. 24 that mandates banks invested in crypto to hold the euro equivalent of their crypto investments as capital, Reuters reported.

The requirement will come into force in January 2025 to give banks enough time to adjust their finances, according to Reuters, The bill was approved with the purpose of eliminating the instability within the crypto sphere.

EU Parliamentarian Markus Ferber said:

“Banks will be required to hold a euro of their own capital for every euro they hold in crypto. Such prohibitive capital requirements will help prevent instability in the crypto world from spilling over into the financial system,”

According to the Association for Financial Markets in Europe (AFME), the new bill does not have a clear definition of what a crypto asset is. Therefore, it could be applied to tokenized securities as well.

Since all EU states have approved the bill, lawmakers will start negotiating the final text with member states to finalize the official script.

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